Real estate investment can be a tough nut to crack. While some thrive in the industry and rise to the top, others struggle to find success. But what is it that creates the difference between the two? Is it personal drive and tried experience? Is it contingent strictly on the health and vitality of the industry? Or is it simply a thing of chance?
This article will detail 15 of the most common mistakes made in real estate investing – from some of the top real estate experts – so you can avoid the most threatening real estate pitfalls and build a solid foundation for optimal success.
FAILING TO KEEP DIGITAL RECORDS WHILE FLIPPING A HOME
Home renovation – or “flipping” houses – has been a popular trend in 2015 and 2016. In fact, a report from RealtyTrac shows that in 2016, 6.6% of all single-family home and condo sales were flips.
Though this number is up 20% from 2015, experts predict that flipping houses will continue to grow as investors become more active and knowledgeable in the field.
Perhaps this percentage would be higher, however, if investors took care in keeping digital records of each and every home they flip. John Bodrozic from Homezada.com highlights the importance of tracking critical data, such as the upfront purchase price, date, and associate loan documentation.
“It is important to track budget, costs, receipts, warranties, owner’s manuals, etc. for each home remodel project they undertake, not only keep the investor on budget for each remodel, but also to keep track of the tax basis of the house (purchase price + total cost of completed projects) which will be needed when filling out their taxes in the upcoming sale of the property,” Bodrozic said.
Bodrozic also notes that if you plan on keeping the flipped house and renting it out, having critical documentation like a home maintenance schedule and detailed digital home inventory will help to ensure that, if there is any damage done to the home by the renters, you’re adequately prepared in case you need to file an insurance claim.